Sensex, Nifty Pre-open Points to Higher Start on Continued Optimism from Iran Peace Deal

Mumbai, June 16: Indian shares traded higher at pre-open signalling a positive start for benchmark indices as traders continue to remain positive on the initial peace pact between Iran and the US and the resulting crash in crude oil prices. 

Nifty 50 traded 0.3% higher at pre-open while Sensex rose 0.4% even as Gift Nifty futures traded 0.4% higher. 

To be sure, both benchmarks rose nearly 1% yesterday after Iran and the US came out with a preliminary peace pact.  

Overseas investors returned to Indian equities on Monday after 13 straight sessions of net selling, purchasing shares worth Rs 200 crore ($21.12 million). Domestic institutional investors also extended their support, pumping Rs 3,189 crore into equities, NSE provisional data showed.  

Spotlight will be falling on GMR Airports, Jyothy Labs, and General Insurance Corporation of India. GMR Airports reported a 6.1% year-on-year increase in total passenger traffic for May, reflecting continued growth in air travel demand. Jyothy Labs said it will pursue legal action against Henkel to enforce its contractual rights following the latter’s decision not to renew the licensing agreements for the Pril and Fa brands. General Insurance Corporation of India (GIC Re) will be in focus after the government announced plans to divest up to a 5% stake through an offer for sale (OFS). The floor price has been set at a 9.1% discount to the stock’s previous closing price. 

As for global cues, Asian equities traded lower on Tuesday, giving back part of the gains recorded in the previous session as investors paused to evaluate the durability of the recent risk rally. 

Market participants remained focused on developments surrounding the U.S.-Iran agreement while also awaiting a key policy decision from the Bank of Japan. Expectations that the Japanese central bank could continue its gradual policy normalization prompted some caution across regional markets. 

The decline suggests that investors are reluctant to chase equities higher despite the easing of geopolitical risks and the sharp retreat in oil prices. 

U.S. stocks, meanwhile, extended their advance overnight, with the Dow Jones Industrial Average closing at a record high and the Nasdaq Composite posting strong gains. 

Investor appetite for risk assets improved significantly after the preliminary U.S.-Iran accord reduced fears of disruptions to oil flows through the Strait of Hormuz, a critical route for global energy shipments. The resulting drop in crude prices boosted expectations that inflationary pressures could ease, providing support to consumers and businesses alike. 

Fuel-sensitive sectors were among the biggest beneficiaries. Airlines, cruise operators, transportation companies and consumer discretionary stocks rallied as investors bet on lower operating costs and stronger demand. 

The CBOE Volatility Index, commonly known as Wall Street’s fear gauge, continued to decline, highlighting the improving mood among investors. 

European markets also participated in the global relief rally, with the pan-European STOXX 600 index climbing to a record high. 

Shares of airlines, automakers, banks and industrial firms led the gains as lower energy prices improved the outlook for corporate profitability and economic activity. Benchmark indices across Germany, France and Spain advanced, reflecting broad-based optimism across the region. 

The move higher underscored investors’ confidence that easing energy costs could provide a meaningful boost to the euro zone economy. 

For Indian investors, the most significant development remains the sharp correction in crude oil prices. As one of the world’s largest importers of crude, India stands to benefit from lower energy costs through softer inflation, reduced import bills and an improved current account position. 

Source

• Exchanges